Ten reasons why Britain shouldn't join the Portuguese bailout

1. We won’t see the money again. It is becoming increasingly clear that Greece will renege on its debts. International loans are always arranged so that the IMF gets its money back first, which means that the EU will take the hit. Portugal’s debt is growing faster than its GDP, making a default almost inevitable.

2.We can’t afford it. If we look only at the cuts in selected government budgets, and ignore the increases in other areas, we can find a total of £6.2 billion. The likely British contribution to a bail-out is £4.2 billion. Why no TUC march about that?

3.It’s illegal. The euro was only agreed in the first place on the basis of a “no bail-out clause” inserted into the Maastricht Treaty in the clearest language that lawyers could devise. Such loans, in other words, don’t simply lack a legal base; they are explicitly prohibited. As Angela Merkel observed, shortly before agreeing to precisely such a bailout: “We have a Treaty under which there is no possibility of paying to bailout states.”

4.It is undemocratic. The Portuguese government fell on 23 March, and a general election is due on 5 June. In the mean time, there is no elected ministry to negotiate the loans. Eurocrats, of course, are delighted by the vacuum: they are much happier dealing with officials than with politicians; politicians, after all, have the inconvenient habit of reflecting the views of their constituents. No danger of that here. As one Commission official observed: “They have to remember it is not their programme, it is ours”.

5.You don’t help an indebted friend by pressing more loans on him. There is an argument for helping Portugal by restructuring its existing debt; there is no argument whatever for increasing its liabilities.

6.This is about rescuing the euro, not about rescuing Portugal. The bailout money will go to European bankers and bondholders, the repayment will come from Portuguese taxpayers. The people of one of the poorest states in Western Europe are being burdened with the cost of propping up the entire European banking system.

7.Portugal won’t recover until it leaves the euro. Decouple, devalue and – if necessary – default. Only when Portugal starts tailoring its interest rates and exchange rates to suit its own needs will it be able to price itself into the market.

8.Greece and Ireland are being forced to contribute. There are two separate EU funds in play: one which imposes obligations only on eurozone members, and one which covers all EU states. Ireland and Greece can stand aside from the first, on grounds that they have already requested assistance; but they cannot avoid the second. They will be forced to borrow hundreds of billions of euros to send to Portugal. Britain should champion the interests of these countries, as well as of every other EU state that has kept its currency. If the eurozone members want to rescue Portugal, let them do it with their own money.

9.Rejecting the deal would strengthen the Coalition. There is a slightly unedifying row going on about whether George Osborne went along with Alistair Darling’s decision to join the bailout fund. Darling says Osborne agreed, Osborne denies it. My guess is that the arrangement was presented to both men as a fait accompli by our Euro-fanatical Brussels officials. The clearest way to end the argument is for the Chancellor to say: “This agreement was reached by my predecessor after his party had been rejected at the polls. I do not consider it binding on this government. I have consulted with Treasury lawyers, who tell me that it is patently against the EU treaties. I am therefore refudiating the deal. I have instructed my department to withhold an equivalent sum from Britain’s EU budget contributions, and I am prepared to fight the issue through the courts”.

10.Portugal is our oldest and truest friend in Europe, and has ranged itself alongside us in quarrel after quarrel. We were prepared, through the centuries, to support our allies against pressure from Madrid and Paris. If we will not now support them against pressure from Brussels and Frankfurt, who will?